Why Effective Human Resource Management is Essential for Business Success

Share this article

Why is human resource management important

In today’s competitive business landscape, Human Resource Management (HRM) has emerged as an ever-critical function for organizational success. It is no wonder that many consider this department the heart and soul of their business.

Recent global events have unequivocally demonstrated the paramount importance of HRM in effectively managing company risk, cultivating a productive workforce, and propelling business goals forward. John M. Bremen, managing director of human capital and benefits at Willis Towers Watson, told SHRM, “The week that trillions of dollars of market value came out of the global economy because people could not work and consume and live normally—that really ended any debate over the value of HR to the enterprise.”

Whether you’re a startup or a well-established firm, embracing HR’s strategic role is a game-changer in today’s business environment. In this blog, we’ll take a closer look at the importance of HRM in small businesses and discuss some best practices to help you make the most out of this essential function.

What is Human Resource Management?

What is human resource management

Human Resource Management is a set of processes, techniques, and functions that are performed by companies to recruit, manage, develop, train, and retain their employees. It also encompasses the implementation of policies to ensure employee rights and compliance with applicable laws.

Allocating dedicated resources to manage a range of HR activities empowers business owners to adopt an organized and strategic approach to employee management. Additionally, it offers valuable guidance in myriad areas such as recruitment, performance management, compensation, employee relations, and training.

Top 10 Benefits of Human Resource Management for Small Businesses

Small businesses often struggle with limited resources and stretched budgets. This makes it all the more important to leverage HRM functions and technologies to maximize efficiency, reduce employee turnover and costs, and stay competitive. Here are some key advantages of having a robust HR system in place:

Benefits of hrm for smb
  1. Improved Employee Satisfaction and Retention: An effective HR strategy empowers employees through meaningful feedback, recognition, career development opportunities, and flexible benefits. As a result, employees feel respected and valued, leading to higher satisfaction levels and improved retention.
  2. Streamlined Administration: A reliable HR platform simplifies tedious administrative tasks such as recruiting and onboarding, managing employee data, tracking vacation leave, sending notifications for expiring documents or certifications, employee handbook creation and implementation, processing payrolls, and more. This frees up time so that the business can focus on executing core strategies.
  3. Scalability: Small businesses often experience rapid growth, which means they need to scale up quickly and efficiently. A well-structured HR system can help small businesses easily adjust their resources in line with their expanding operations.
  4. Regulatory Compliance and Risk Management: It is essential for a business to adhere to the applicable laws and regulations throughout its operational life cycle. A competent HR team and an effective system ensure that the business remains compliant with all legal requirements.
  5. Enhanced Productivity: A dedicated team and an organized HR system can help empower employees with the right tools, training, and resources and ensure that everyone is working towards common goals. This helps boost employee morale, which in turn leads to increased productivity.
  6. Reducing Turnover: A well-structured HR system can help small businesses reduce employee turnover, as it enables owners to identify potential attrition risks and proactively address any issues that employees may have.
  7. Promote Diversity and Inclusion: Diversity and inclusion are essential for any organization to stay relevant, competitive, and progressive. HRM can help small businesses promote a diverse workforce by encouraging employees of various backgrounds and experiences to contribute their ideas and perspectives.
  8. Create a Safe and Healthy Workplace: A strong HR system is key to fostering a healthy workplace culture that fosters collaboration, respect, support, and mutual trust. This helps employees feel valued and appreciated, which in turn translates into stronger performance, increased engagement, and higher retention levels.
  9. Prevent Workplace Harassment and Minimize Liability Issues: HRM can help small businesses build a robust system that helps prevent workplace harassment, minimize liability issues, and protect the company from any potential litigation risks.
  10. Conflict Resolution: HRM can help small businesses identify and resolve conflicts in a timely manner, mitigating the impact and ensuring continuous progress.

Challenges and Solutions in Implementing HRM in Small Businesses

Human resources team talking to an employee

Implementing an effective HRM system in small businesses can be challenging due to various factors such as limited resources, budget constraints, and lack of knowledge or expertise. Here are some key challenges faced by businesses in implementing HRM:

Limited Resources

Small businesses often lack the resources needed to implement a robust HR system. To address this, they can focus on utilizing cost-effective solutions that are tailored to their specific needs and budget constraints.

Lack of Expertise

Developing an effective HR system requires extensive knowledge and experience in areas such as recruitment, compliance, training, employee relations, and performance management. To overcome this, they can partner with experienced HR professionals who can provide the necessary guidance and support.

Poor Communication

Effective communication is key to any successful organization. Small businesses must ensure that their human resources processes are optimized for efficient collaboration among employees, departments, and stakeholders. This includes ensuring all team members have access to effective communication channels, such as email, messaging platforms, or video conferencing.

Inadequate Technology

Utilizing the right tools and technologies is essential for small businesses to operate efficiently and remain competitive. Introducing cutting-edge HR systems can help streamline administrative tasks and empower employees with the resources they need to succeed.

If you are a small business owner facing any of the aforementioned challenges, it may be beneficial to seek out a reliable provider of human resource management solutions. HR outsourcing can provide a comprehensive solution to address these challenges. This approach enables access to top-tier HR expertise and advanced technology while also yielding cost savings. This way, small business owners can focus on their core functions while ensuring that their HR functions are managed effectively and in accordance with the best practices.


Group of diversified people

Navigating the complexities of HRM can be daunting, particularly for small businesses with limited resources. However, these complexities can be transformed into strategic advantages with professional assistance. Investing in HRM is not just a tactical move but a strategic one that paves the way for business growth and sustainability.

EnformHR is dedicated to providing outsourced HRM solutions tailored specifically for small businesses. We understand the unique challenges that small businesses face and offer customized solutions to turn these challenges into opportunities.

Don’t let the intricacies of HRM hold your business back. Take the first step towards a strategic and effective human resource management approach. Get a free consultation today.

Success Stories

EnformHR has been an exceptional partner for our company (of 155 employees) in the area of human resource management. From the moment we engaged their services, we experienced exceptional professionalism and expertise that exceeded our expectations. EnformHR has helped us revamp our company handbook, revised our employee evaluation forms, and given us timely advice on new employment laws and best practices. They are always very mindful and respectful of our budget.

Their team of seasoned experts is knowledgeable, friendly, and always willing to go the extra mile to ensure our needs are met. Moreover, their timely service and attention to detail have resulted in a seamless and efficient process for us. We’ve seen a marked improvement in our HR processes since partnering with EnformHR.

Overall, I highly recommend EnformHR as a top-notch human resource consultancy firm. They have delivered on all their promises and exceeded our expectations in every way. If you’re looking for reliable and professional HR services, EnformHR is the way to go!

– Garden State Cold Storage, Newark, NJ

I have been working with EnformHR for many years regarding sensitive issues as well as Employee Handbook implementation. I completely trust Cristina and her team when I need clarification on current laws.  During this pandemic, Cristina has been fast and informative, giving us directions on handling employee issues.  Thank you, EnformHR, you’re the Best!

– Karen Spedaliere

Share this article
Avatar of cristina amyot

Cristina Amyot

Cristina Amyot, SPHR, the firm’s President, leads the HR Services Group. Ms. Amyot graduated with a Bachelor of Arts Degree and Master’s Degree in Human Resource Management from Rutgers University. She holds a Senior Professional in Human Resources (SPHR) certification from the Human Resources Certification Institute and a Life, Accident, and Health Insurance License from the State of New Jersey Department of Banking and Insurance.

Recent Posts

Get Back to Running Your Business